2006--The Good, the Bad and the Ugly

2006: The Good, the Bad and the Ugly

FS Advisor: Jan. 3, 2006

By Abny Santicola, associate editor, FundRaising Success

An increase in accountability and a decrease in government funding are just two of the major challenges that nonprofits will face in 2006, according to Anthony Knerr, founder and managing director of New York-based nonprofit strategic consultancy Anthony Knerr & Associates, which works with nonprofit organizations on issues of strategic positioning, program development and global campaigns.

Here, Knerr’s take on some hot-button issues looming on the horizon for the new year:

Accountability and transparency: “I think there’s going to be more demand for and interest in benchmarking nonprofits,” Knerr says, pinpointing metrics such as those that determine how nonprofits are fulfilling their mission and ensure that they’re using donated funds wisely and efficiently and have the proper governance.

“That’s an issue that, for a variety of reasons, has been moving more and more center stage, and I think that’s only going to grow for all sorts of reasons,” he adds. “Donors and founders are both getting much more keen on and interested in questions of accountability.”

Reduction in funding: Due in part to the Bush administration’s goal to cut the federal budget deficit in half, Knerr says, “States are being confronted with the mandate to balance their budgets. But with rising healthcare costs and other non-discretionary items, [they] are going to be reducing support for all kinds of nonprofits. Universities are going to be hit especially hard, he suggests.

With the “no-tax- increase atmosphere in the air,” Knerr says, it’s doubtful these reductions will abate in the next 12 months.

Large gifts: Knerr predicts that over the next year there will be a continuation of one of last year’s giving trends in which large gifts were given to museums, universities, performing-arts organizations, etc.

“My sense is we’re going to see some record-breaking major contributions, kind of real path defining, if you will -- together with a broad-based general increase in philanthropic support of nonprofits,” he says.

More nonprofit organizations: This is good news and bad news, Knerr says -- good in that it’s a hopeful thing when individuals feel the need for a new nonprofit to meet a particular local or community need or broad-based issue, but not so good “in that there already are lots and lots and lots of nonprofit organizations, and many of them are struggling ... in terms of cutbacks in public funding or they’re not upscale or they don’t have the infrastructure to really be able to thrive in a highly competitive environment.”

“I think a lot of the nonprofits, particularly smaller ones, are going to be struggling, really struggling, to keep their doors open and to deliver programs and activities that are mission related,” he adds.

But it’s not all bad news. “Seems to me the more transparency, the more accountability, the more explicit metrics there are to measure nonprofit performance, I think it’s healthy for the industry, I think it’s healthy for individual nonprofits, and I think it’s actually quite good for individuals and organizations which support nonprofits of all stripes,” he says.

All in all, Knerr says, the opportunities for philanthropic funding are unparalleled for nonprofits.

“As the baby boomer generation comes into retirement, entrepreneurs and investment bankers and hedge-fund operators and the like have just made unparalleled amounts of money,” he says, adding that organizations that are smart and thoughtful about who they are and what their aspirations are, and how they communicate this, will capture those resources. To succeed, organizations should approach funders, saying, “Please come and invest with us to achieve a wonderful future,” rather than simply, “We need the money.”

Knerr can be reached by visiting http://www.aknerr.com